Cost-share

The portion of the total project costs of a specific sponsored agreement that is borne by the Amherst campus (or in some cases, a third party), rather than the sponsor.

Cost sharing normally represents a reallocation of departmental or school resources to partially support an externally sponsored project. Cost sharing on federal projects must be from non-federal sources.

Examples of cost sharing include contributions of personnel effort and associated fringe, equipment, tuition waivers, and the associated indirect cost. Please note that cost share of personnel effort cannot comprise of volunteer unpaid effort. Faculty on nine month appointments may not show as cost-share unpaid summer effort. Should the indirect cost rate the sponsor allows be lower than the University’s negotiated rate, the difference between the two rates may also be used as University cost share. In the event of an indirect cost waiver from the Vice Chancellor for Research and Engagement, those indirect costs may also be cost shared.

Cost sharing is classified as either mandatory or voluntary. Cost sharing that is classified as "mandatory," is a written requirement of the sponsor, and the ability to apply for and receive an award is contingent upon the campus's willingness to comply with this requirement. Cost sharing is classified as "voluntary" when it is not a requirement of the sponsor and the campus voluntarily proposes to cost share an expense, whether it is included formally in the budget or, included within the text of the proposal. Voluntary cost share also includes situations where a commitment is not made in a proposal, but the campus absorbs costs which directly benefit the project. It should be noted that UMass policy does not allow for the inclusion of voluntary cost share in proposals unless the Principal Investigator has the approval of the Chancellor for Research and Engagement to include such voluntary cost share.

An agreement to cost share, whether voluntary or mandatory, represents a commitment, subject to audit, of the Amherst campus to provide the stated services or assets during the performance of the project. Principal investigators are urged to discuss proposed cost-sharing arrangements well in advance of submission of the sponsored agreement proposal with their department chair and pre-award staff of the Office of Grant and Contract Administration (OGCA).

In regard to key personnel effort, keep the Minimum Effort on Sponsored Projects policy in mind in regard to PI and Co-PI effort. Also, if cost sharing Academic Year Effort, you must receive the prior approval of the Provost and include a copy of the approval in the routing of your proposal to OGCA. Please Refer to Procedure for Requesting Provost or Vice Chancellor Funds For use as Cost Share.

Guidelines

Unless required or strongly suggested by the sponsoring agency, DO NOT cost-share. Cost share adds an administrative burden to the Departments who must track & report the cost share to an auditable standard.

The sponsor must have a written policy in place in order to cost-share. Provide OGCA with a copy of this policy if not otherwise included in the guidelines

All cost-share amounts and their associated account numbers must be listed on the Internal Processing Form. This cost-share must also be authorized with a signature, where indicated, by the individual authorized to commit the shared funds. Typically for Salaries, it is the Department Head or Dean. Please remember that if you are cost sharing Faculty AY effort, you must receive prior approval from the Provost. The Provost approval request must be made by the PI to the Dept. Head, the Dept. Head to the Dean, and then the Dean to the Provost. Only the Dean should put the request forward to the Provost. Please do not copy the Provost in on any of the requests prior to the Dean's approval. A copy of that approval shall be routed with your IPF and the cost share must be approved on the Internal Processing From as noted above.

Cost-sharing on federal projects must be from non-federal sources

Cost-shared items must contribute directly to the project

Cost share is expended during the project's period of performance

When is Cost Sharing Permissible?

Mandatory Cost-Sharing: Although mandatory cost sharing was eliminated as a requirement by the National Institutes of Health in the eighties, mandatory cost sharing is still a requirement of some private and government sponsors. Mandatory cost sharing can include any direct cost budget item and indirect costs, depending upon the specific requirements of the sponsor. The campus accepts mandatory cost sharing requirements when the following conditions have been met:

The cost-sharing requirement is documented in the written application guidelines of the sponsor and those policies are available to OGCA in its review of the proposal.

The person responsible for contributing the funds to cover the cost sharing has reviewed and approved the proposal to signify the ability and willingness to provide the required cost sharing resources (e.g. percent of principal investigator's salary to cover the effort devoted to the project).

Non-Mandatory or Voluntary Cost-Sharing: It is the policy of the Amherst campus to assume a cost-sharing commitment only when required by the sponsor or by the competitive nature of the award, and then to cost share only to the extent necessary to meet the specific requirements.

Unnecessary cost-sharing adds an administrative cost and burden to the principal investigator, the department, the Controller’s Office, and other administrative functions on campus due to the need for creating an adequate and auditable paper trail for those costs. Undocumented or improperly documented cost-share leaves UMASS vulnerable to audit findings.

Principal investigators are strongly encouraged to request reimbursement of the total anticipated costs of a project in the proposal budget. Proposals which voluntarily offer to provide personnel effort of other resources at no cost to the sponsor are offering cost sharing which is generally discouraged by the campus. The campus accepts voluntary cost sharing on grant or contract proposals only when the following conditions have been met:

The person responsible for contributing the matching funds has reviewed and approved the proposal to signify the department's ability and willingness to provide the cost sharing resources.

The competitive need for cost sharing has been well documented and reviewed by OGCA and the cost shared items are easily documented as defined further below.

If the sponsoring agency does not require cost-share but the PI feels voluntary cost sharing is justified, permission to include such Voluntary Cost Share Approval must be obtained from the Vice Chancellor for Research. Such approval shall be requested 2 weeks prior to submission to OGCA.

All cost sharing (mandatory and voluntary) must have a signature of approval and an account reference for the source of funds to cover the cost sharing, typically the department head's approval is in order.

Cost share categories:

The following categories for cost sharing are in order of preference for cost sharing commitments

1. Salaries

Cost share of salaries is allowable for the portion of salary associated with any UMass employee's effort committed to the proposed project. Facts to consider:

2. Fringe

Cost share of faculty on nine-month academic appointments can only be committed for the academic year. Summer pay cannot be cost-shared on academic appointments unless there has been a special arrangement where the Department Head or Dean has agreed to use other University sources such as RTF or State funding to pay the faculty summer compensation. This is an unusual circumstance.

The dollar value of the shared time must be listed on the IPF and signed for by the Department Head, Dean, Vice Chancellor who is in charge of the account from which the salary is paid.

Cost-share of salaries must be from a non-federal account, typically the state ledger from which the individual is paid from. If uncertain, check with your bookkeeper or Department Head

Cost share of Graduate Research Assistant salaries typically represents real cash vs. the in-kind share of a faculty member's time. Take care not to sign up to what may turn out to be burdensome financial commitments for the department.

Only cost-share fringe that is associated with cost-shared salary. See the Fact Sheet for current rates.

3. Indirect Costs

Sample (Please note – 55% for the indirect rate in the following table is used for exemplary purposes only. For current UMASS Indirect rates, please see the Fact Sheet

Unless the guidelines explicitly state otherwise, cost-share can be claimed on the indirect costs associated with the direct charges being shown as UM cost-share.

Cost-share of indirect costs are always MTDC rather than TDC

Sponsor

UMass

Total

Salary

$50,000

$10,000

$60,000

Fringe

$15,000

$3,000

$18,000

Equipment

$10,000

$1,000

$11,000

Supplies

$1,500

$1,500

Other

$500

$500

Total Direct Costs

$77,000

$14,000

$91,000

Total Indirect Costs (55% MTDC)

$36,850

$7,150

$44,000

Total Cost

$113,850

$21,150

$135,000

Waiver of indirect costs:

If indirect costs ordinarily charged to the sponsor are totally or partially waived by the Vice Chancellor for Research and Engagement, or if the sponsor forbids the charging of indirect costs, the percentage value of the waived amount can be cost-shared - unless restricted by the sponsor. See below for sample calculation of the scenario where the indirect cost rate has either been waived or restricted by the sponsor. Contact the OGCA pre-award administrator responsible for the sponsor in question if any questions arise.

MTDC & TDC cost share issue

When the indirect cost rate in effect for the sponsored program is less than the UM indirect cost rate, cost-share on the difference between the two rates can be utilized (see example below).

Since the basis for the calculation of cost-shared indirect costs is always MTDC, the value of indirect costs assessed on the sponsor funded equipment and subcontracts - that portion of subcontracts in excess of $25,000 - are then subtracted from the shared amount of indirect costs (see example below).

When the sponsor indirect cost basis is Total Direct Cost (TDC) and the Sponsor limits indirect costs to an amount less than UM rate for project type (i.e., 8%, 10%, etc), consider the following example where the sponsor only allows a 10% TDC rate. The example rate of 55% MTDC research rate is used for illustrative purposes in the UMass column. For current UMASS Indirect rates, please see the Fact Sheet

Sponsor

UMass

Total

Salary

$50,000

$10,000

$60,000

Fringe

$15,000

$3,000

$18,000

Equipment

$10,000

$1,000

$11,000

Supplies

$1,500

$1,500

Other

$500

$500

Total Direct Costs

$77,000

$14,000

$91,000

Total Indirect Costs (SP: 10%, UM: 55%)

$7,700

$36,300

$44,000

Total Cost

$84,700

$50,300

$135,000

Explanation of indirect cost share:

Sponsor budget:

10% x $77,000 = $7,700

UMass cost-share:

Two components of shared indirect costs:

I. Cost share indirect costs at the rate of 45% on the sponsor direct costs. This rate represents the sample rate of 55% MTDC rate for research less the rate allowed by the sponsor (10%). The base is $77,000 less $10,000 (equipment) = $67,000

45% x $67,000 = $30,150

The difficult part, because the overall project indirect cost cannot exceed our federally negotiated sample indirect rate at 55% MTDC, it's necessary to subtract the value of 10% of the equipment cost that is charged to the grant in the sponsor column.

$30,150 - $1,000 = $29,150

II. Cost share indirect costs at the sample rate of 55% (MTDC) on the direct costs shared by UMass.

55% x $13,000 = $7,150

Total Indirect cost-share: $36,300

4. Equipment:

Equipment can be cost-shared only if it meets the following criteria:

Has not already been purchased

Will be purchased specifically for exclusive use on the project

Purchased during the project’s period of performance

Ownership of equipment will remain with UM at the end of the project period

For those situations when the sponsor does not require matching funds on equipment and it is anticipated that the amount budgeted for sponsor support will only fund a portion of that equipment, please adhere to the following procedures:

Submit a request for voluntary cost share to request permission to include cost-share in the budget

If the Vice Chancellor approves inclusion of non-mandatory cost-share:

Show the dollar amount of the UM contributed portion of the equipment in the cost-share column of the IPF and provide authorized sign-off of the person in charge of the cost share account, typically the Dean or Deapartment Head

University-wide Research Area matching funds for equipment are signed by the Chancellor for Research and Engagement’s office. All other matching funds should ordinarily be signed by the person in charge of the cost share account, typically the Dean or Department Head

List equipment in the sponsor budget as "partial funding for equipment"; show value of contributed amount as applicable

Cost share of tuition is allowable as long as graduate student(s) have a "working" vs. a "non-working" appointment. A "working" appointment results in the waiver of tuition and fees. "Non-working" appointments may result in tuition waivers as well. For help in defining "working" vs. "non-working" graduate appointments call the Graduate School Business Office for assistance and on the determination of graduate student appointments (5-5289) or see The Graduate School Homepage, "Assistantship information for....(current year here)." The minimum qualifying per semester salary required to earn a tuition waiver is noted top right in the box marked "TUITION and CURRICULUM FEE WAIVER".

See the OGCA Fact Sheet for the current annual cost-share allowance for in-state and out-of-state tuition. This figure is the result of an audit worthy equation that blends the value of in-state and out-of-state rates since the graduate student’s residency is often unknown at the time of submission.

Further considerations on Tuition:

Tuition is exempt from indirect costs. Do not assess indirect costs on shared tuition

Place tuition in the "Other" budget line item category

Shared tuition can derive from either RA's being charged to the grant or cost-shared RA's allocable to the project

In order to earn a tuition waiver, the student must earn a specific minimum salary. See memo on Assistantship Informationto determine current minimum.

The tuition waivers must be explicitly approved on the IPF by The Graduate School Business Office. Hard copy IPF's requires their signature, while the routing of the eIPF's requires their inclusion in routing approval map. Show dollar value of cost-shared tuition waivers on the IPF.

6. Subcontractor

If the budget includes a subcontract to another organization, that organization can include shared costs in their own budget if the following is observed:

The cost sharing is specifically signed off by the authorizing official of that organization, their OGCA equivalent

Shared costs must be auditable. A rule of thumb to follow is to show only those type of costs allowed by UM (salaries, fringe, indirect costs, etc -- items with audit trails)

Due to the administrative burden at the Departmental level of tracking cost sharing from a subcontractor, cost sharing from this category is recommended only as a last resort.

Subcontractor cost share would be detailed in the subcontractor detailed budget and appear in the overall UMass budget as follows (dollar figures are hypothetical):

Sponsor

UMass

Total

Salary

$50,000

$10,000

$60,000

Fringe

$15,000

$3,000

$18,000

Equipment

$10,000

$1,000

$11,000

Supplies

$1,500

$1,500

Other

$500

$500

Subcontractor

$25,000

$14,000

$39,000

Total Direct Costs

$102,000

$28,000

$130,000

Total Indirect Costs (55% MTDC)

$50,600

$7,150

$57,750

Total Cost

$152,600

$35,150

$187,750

Further considerations on subcontractor shared costs from sample:

The $14,000 includes shared subcontractor indirect costs

Shared indirect costs are NOT assessed by UM on the subcontractor's $14,000

7. Third Party cost share

Cost share from third-parties are not allowed unless specifically required by the sponsor. If the party providing the third party match is not an official subcontractor included in your proposal and it only providing this match by letter of commitment, approval of the Vice Chancellor is needed. The reasoning behind the approval is that this type of cost share is very high risk to the institution. Should it not come through, or be disallowed by the sponsor, the amount of cost share must come from other University sources, or will result a cost disallowance and payback to the sponsoring agency. An email request should be submitted to the Vice Chancellor for Research and Engagement, Mike Malone. Your request should include very specific details regarding why the third party match is needed, a copy of your budget with the third party match as well as one without the third party match, docmentation on how the match will be tracked and reported, documentation from the authorized representative of that agency's commitment to provide the match.

Contact the OGCA proposal team to discuss before submitting your waiver request to the Vice Chancellor for Research and Engagement.

If the Vice Chancellor for Research and Engagement formally approves third party cost-share, the following considerations must be taken into account:

The third party contributor must provide OGCA with a letter of support/commitment. This letter would provide some detail about the resources committed and should be signed by the individual authorized to make such commitments (OGCA equivalent; contracting officer, business official, etc)

Shared costs must be auditable and directly allocable to the project and documented as such in a letter to OGCA. Third party contributors should use this linked model Third Party Cost-Share letter, on their official letterhead and have it signed by the authorizing official as noted above.

Do not assess indirect costs on third party cost-share as part of the UMass indirect cost cost-share.

Documentation of Cost Sharing:

Faculty, Student or Staff Effort:

When such effort is committed in a sponsored project proposal, or is otherwise provided to a sponsored project, it must be identified and tracked on the annual effort survey. The campus is responsible for documenting to sponsors and auditors that the proposed expenses were actually cost shared. Each faculty or staff member who provides a cost sharing contribution to sponsored project(s) must identify the percentage of his/her effort from campus funding which is devoted to the project(s). The account number used to fund the cost shared effort is also identified on the effort survey. The campus computes the total cost sharing payroll and fringe benefit dollars related to sponsored research and then adds it to the research modified total direct costs for the indirect cost proposal.

Other Expenses:

The campus discourages the cost share of(non-payroll) expenses primarily due to the difficulty in documenting these types of costs. If cost sharing of other expenses is anticipated on a sponsored agreement, the principal investigator must provide an account reference and means of documenting the costs to OGCA. Annually and upon completion of the sponsored agreement the principal investigator must provide a report of cost shared expenditures to the Assistant Controller or designee for the Grant Accounting Section.

Third Party Cost-Sharing:

In kind contributions from non-university sources is only allowed in unusual circumstances. If allowed, documentation of the commitment from the non- university source must be provided with the submission of the proposal to OGCA. Should the project be awarded, the third party would be required to enter into a formal agreement with the University indicating its commitment to provide the University reports and supporting documentation on their contribution for auditing purposes.

This page is authored and maintained by the Office of Grant & Contract Administration. If you have any questions, please contact us at (413) 545-0698 or by email ogca@research.umass.edu.

The mission of the Office of Research and Engagement is to provide leadership and services that support the growth of research and scholarship across the campus, to facilitate funding and engagement with external partners, to promote innovation and societal impact, and to ensure compliance with all research related regulations and policies.